How Does Medical Coding Differ from Medical Billing?

Every private medical practice bills patients for their services. Billings are usually submitted directly to the patient’s insurance company or to a government insurer, such as Medicare or Medicaid. Government insurers and most private insurers require billings to be annotated with codes that specify the exact service or procedure that is being billed. Codes are therefore a vital part of medical billing, but medical billing involves more than assembling a collection of codes.

Medical billing and medical coding are two different functions that are often performed by two different groups of employees. Some providers handle all of their billing and coding internally while others outsource both functions. Some handle one function internally but outsource the other. 

Since billing and coding require different skill sets, it is common for different individuals to perform the two functions. Medical billing experts have knowledge of both coding and billing practices.

Medical coding is the process of translating services and procedures described in medical records into standardized codes. The two sets of codes that are commonly used are diagnostic (ICD) codes and procedural (CPT) codes. Medicare and Medicaid billings incorporate CPT codes in a more expansive HCPCS coding system.

Diagnostic codes describe medical conditions. The International Statistical Classification of Diseases and Related Health Problems (ICD) codes are a list of medical classifications created by the World Health Organization. The current list in widespread use has been designated ICD-10-CM.

Coders determine the correct ICD code by reviewing medical records and determining the specific health condition diagnosed by a healthcare provider. For example, a gastric ulcer that has not been designated as acute or chronic and that has not shown evidence of a hemorrhage or perforation would be coded as K25.9.

While ICD codes are used for statistical and research purposes, they also help insurers understand why a patient obtained treatment. When an insurer is billed for treatment of a gastric ulcer, an insurer will expect the billing to show an ICD code that reflects a diagnosis of that condition. If there is a disconnect between the diagnosis and the treatment, the insurer may reject the billing.

Procedural codes describe services and procedures that were rendered by a healthcare provider. Current Procedural Terminology (CPT) codes are developed, maintained, and regularly updated by the American Medical Association, often with input from insurers and the Centers for Medicare and Medicaid Services. 

Coders determine the correct CPT code by reviewing medical records and identifying each service or procedure that a patient received. They match each procedure or service to a 5-digit code. In some cases, they may attach an additional code (known as a modifier) to provide extra information about the procedure or patient.

Government and private insurers base payments on CPT codes. Each insurer has agreed to pay a fixed amount of money for each procedure or service identified by a CPT code. That payment may or may not be affected by a code modifier. Some modifiers, for example, indicate that the procedure took longer than usual to perform and thus triggers an additional payment.

After obtaining diagnostic and procedural codes from medical coders, medical billers use billing software to prepare billings for submission to patients and insurers. Medical billers are responsible for making claims for payment and for following up with insurers and government agencies to assure that claims are paid.

When billings are rejected, medical billers track down and correct errors that caused the rejection. Medical billers are also the first line of communication between healthcare providers and patients or insurers concerning the accuracy of medical billings. When medical billers determine that the rejection of a claim was in error, the billers explain to insurers why the claim should be paid. When a billing is paid in part and a patient remains responsible for paying some or all of the balance, the medical biller answers the patient’s questions about the patient’s payment responsibility.

Medical billers often have primary responsibility for maintaining the cash flow of a medical practice. They may oversee invoice preparation and account payments. Medical billers might have authority to negotiate payment plans with patients. Medical billers may work with medical practice owners or their lawyers in deciding whether medical bills should be placed for collection.

Medical billers may work with coders when an insurer or government agency questions the accuracy of billing codes. While the coder has primary responsibility for selecting CPT codes, a medical biller may gather further information and ask the coder to revisit a coding decision that is questioned by an insurer or government agency.

Both medical coders and medical billers are familiar with medical terminology. Medical coders may have more experience and training to help them understand and interpret the information contained in medical records.

Medical coders usually have more training in the nuances and complexities of medical coding than medical billers. Medical coders participate in continuing education that keeps them abreast of changes in the CPT codes that are instituted by the AMA.

Medical billers generally have a stronger background in bookkeeping methods that are common to medical billing. Medical billers need to master the particular software package used by their employer to generate medical bills.

Medical coders and billers are both expected to work efficiently and accurately. Both jobs require employees who pay careful attention to detail. However, medical billers have more contact with patients and insurers than medical coders. Communicating professionally with patients who are angry because they don’t understand a billing can be challenging. People who prefer working with data to working with people might find satisfaction in medical coding, while more extroverted individuals who want to work with data and people might be well suited to medical billing.

Smaller medical practices sometimes combine the roles of medical coder and medical biller. They do so to reduce employee overhead. Larger practices, hospitals, and companies that provide outsourced services to medical practices are more likely to hire employees who specialize either in coding or billing and to divide work duties accordingly.